Home Loans In Colorado

The state of Colorado is located in the Western United States Mountain West area. It includes most of the Southern Rocky Mountains, the western border of the Great Plains, the Colorado Plateau’s northeastern region, and most of the Southern Rocky Mountains. It is the eighth-largest and 21st-most populous US territory.

If Colorado is where you hope to spend the rest of your life, you’re researching mortgage options to ensure you can afford the house of your dreams. The good news is that Colorado has a wide variety of mortgage options.

Home Loan Programs in Colorado

Several home loan programs are available to fund the purchase of a home, with conventional conforming loans being the most popular among homebuyers. However, various mortgage options for consumers would not qualify for traditional financing. There is a home loan program to suit every borrower’s preferences, from government-insured and guaranteed mortgage loans to Non-Conforming mortgage loans.

• Conventional Loans

What exactly is a conventional loan? A conventional mortgage is a home loan not guaranteed or insured by the government. Conventional loans generally comply with Fannie Mae and Freddie Mac’s down payment and income requirements, as well as the Federal Housing Finance Agency’s (FHFA) loan limits. They can be either conforming or non-conforming. The minimum credit score requirement to be eligible for a conventional loan is 620.

Conforming loans are mortgages that meet the funding guidelines set by the Federal Housing Finance Agency every year and the criteria of Fannie Mae and Freddie Mac, the two government-sponsored enterprises. Borrowers with excellent credit benefit from conforming loans because they offer low-interest rates to borrowers with good credit. For 2023, the maximum loan limit for conforming loans of a single-family residence in most counties in Colorado is $726,200. 

A non-conforming loan is a mortgage loan that doesn’t meet Fannie Mae and Freddie Mac’s guidelines, therefore, cannot be sold to them. Non-conforming loans may also exceed the loan limits set by the FHFA, making them jumbo loans. 

• FHA Loans

The Federal Housing Administration (FHA), under the jurisdiction of the US Department of Housing and Urban Development, insures the mortgage loan against future default by the borrower. Insuring the loan against default takes the risk away from lenders in the event of a foreclosure. This allows the lenders to originate FHA loans and offer more favorable terms than conventional loans.

FHA loans are the most accessible home loan program. The minimum credit score requirement to qualify for FHA’s 3.5% down payment is 580. However, borrowers with scores between 500 – 579 may still be eligible with a minimum of a 10% down payment. The FHA loan limits in Colorado vary by county. The standard loan limit for a single-family residence in most counties in Colorado is $472.030. Some counties, like Arapahoe, Broomfield, and Denver, have a limit of $787,750; others have a higher loan limit, like Boulder, which is $856,750, while Eagle and Garfield Counties have a loan limit of $1.089.300.

• VA loans

A VA loan is a no-money-down mortgage option available to qualified veterans, current duty service members, and their families. Private lenders provide VA loans and are partially backed by the US Department of Veterans Affairs (VA). The VA guarantees a portion of the loan, allowing lenders to offer a more favorable term than other home loan programs.

To qualify for a VA loan, you or your spouse must meet the Department of Veterans Affairs (VA) minimum service requirements, have a valid Certificate of Eligibility (COE), and meet the lender’s credit and income requirements.

• USDA-Guaranteed Home Loans

The USDA Guaranteed Home Loan Program enables approved lenders to provide eligible low- and moderate-income households with 100% financing and no-money-down mortgage loans. The United States Department of Agriculture guarantees a portion of the loan, allowing approved lenders to offer 100% financing to eligible rural borrowers.

To be eligible for a USDA-Guaranteed Loan, borrowers must have a household income of at most 115% of the median income in the area. They must also occupy the property as their primary residence. They must be US citizens or qualified resident aliens who cannot get conventional financing. Those suspended or debarred from participation in federal programs are disqualified.

• Jumbo Loans

A jumbo loan, also called a jumbo mortgage, is a home loan that exceeds the “conforming loan limit” of Fannie Mae and Freddie Mac, two government-backed enterprises that buy and manage most single-family home mortgages in the US.

The ability to sell a mortgage to Fannie Mae or Freddie Mac is a safety net or guarantee for the lender; therefore, financial institutions are extra cautious when evaluating applications for jumbo loans to verify applicants’ ability to repay the loan.

 The requirements of a Jumbo loan include (1) a higher credit score, typically 700 or better, (b) a larger down payment, at least 10% down, and some lenders require 20 – 30% down, (3) a greater cash flow and a lower debt-to-income ratio of typically less than 43%, and adequate cash reserves, usually 6 – 12 months of the total monthly mortgage payments.

Apply For A Home Loan With Capital Home Mortgage

Capital Home Mortgage is a direct mortgage originator and servicer in Colorado, offering various mortgage options to consumers. Capital Home Mortgage can identify the financing option that best fits your requirements and budget, regardless of whether you were born in Colorado or are a newcomer. If you need a mortgage to purchase, refinance, or consolidate your loans, we are here to help.

Call our Home Loan Specialists at (303) 226-1177 to begin becoming a homeowner!